CURRENT EVENT ANALYSIS

Instruction

1. You need to analyze two cases.

Case-1 is about a microeconomic topic: elasticity and illegal drugs.
Case-2 is about a macroeconomic topic: inflation and purchasing power.

2. Each case is 5 points (5 % of final grade). So, current event analysis is 10 points (10% of final grade)

3. Turn in your analysis - Hardcopies (one page case-1 analysis and one page case-2 analysis)
- At 11:00 am on April 24, Wednesday
- In class

4. The written answer must be generated by a standard word processing package (e.g. WORD).

- Handwritten homework is not acceptable.

5. [Style Guideline] USE:

- Times New Roman font
- 12 point
- Single-spaced
- One inch margins

6. Your analysis must include at least the following four paragraphs:

- Introduction (at least one paragraph) - Economic concepts and tools (at least one paragraph) - Your opinion through the lens of economic concepts and tools (at least one paragraph) - Conclusion (at least one paragraph)

7. You may work together (in groups) on the Current Event Analysis, but all written analysis must be your own work.

Name:

Microeconomic CASE: Elasticity and Illegal Drugs

A persistent problem facing our society is the use of illegal drugs, such as heroin, cocaine, ecstasy, and crack. To discourage the use of illegal drugs, the U.S. government devotes billions of dollars each year to reduce the flow of drugs into the country. Drug interdiction reduces the supply of drugs. Meanwhile, drug education reduces the demand for drugs. Due to drug addict, price elasticity of demand is inelastic.

Question: Which policy (drug interdiction vs. drug education) is more effective to discourage the use of illegal drugs and protect drug users and their families from drug dealers? Why?

Name:

Macroeconomic CASE: Inflation and